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Start-up connections

Start-up connections

Rick Hood sees a litany of Rogue Valley start-ups laboring to meet short-term goals at the expense of mapping out their future.

Since Southern Oregon Regional Economic Development Inc. hired Hood a year ago to help local companies obtain financing and investment, he has often encountered companies simply too busy to address those long-term needs.

“We have small companies struggling to succeed, have their heads down and working really hard on day-to-day business,” says Hood. “They’re sweating the details about making payroll next week and next month’s obligations.”

Hood likens the firms to eddies in the economic stream.

“There are a lot of small eddies, where a lot of companies and entrepreneurs are caught up in their own world,” he said. “The role we can play is to get those eddies to overlap and start making bigger cycles and circles and connections.”

SOREDI aims to foster relationships within the start-up sphere during its inaugural Launch & Tech Symposium Thursday, April 19, at the Ashland Hills Hotel & Suites.

“A day doesn’t go by that I don’t discover a company, a resource, a mentor here in this community,” Hood said. “It just kind of blows your mind. I can believe these things are happening in Southern Oregon. I think some of the obstacles are that, in some cases, the resources don’t know what the needs are and vice versa. They just haven’t met one another. They haven’t found the partners or mentors that are here — it’s just a question of visibility, and I think we’re well on our way to making sure that visibility is here.

“I’m very bullish on Southern Oregon,” Hood said. We have the talent, we have the will to grow, and we will continue to be a thriving place for small companies to relocate and for entrepreneurs to start up here.”

As a result, he said, less-urban outposts such as Southern Oregon need to embrace the new economy’s small-scale start-ups.

“If you look at the traditional local economy of Southern Oregon, the pillars have been lumber, timber, orchards, agriculture and various other things that once upon a time provided real career opportunities for all kinds of people,” Hood said. “With what’s going on in the world, that’s no longer quite as robust as it used to be. “

While the region has made strides in revamping its economic foundation, the reconstruction is really just beginning. The challenges for Rogue Valley start-ups, in Hood’s estimation, boil down to places to live, spaces to work, and working capital.

The Oregon Community Foundation’s “Oregon Capital Scan” paints a relatively bleak picture for southern counties.

“We don’t get a lot of capital trickling down here,” Hood said. “Particularly if you’re a company run or founded by a woman or minority,” he said.

Software development, solar, alternative-energy applications, medical and electronic devices are among the forerunners.

“I think we have moved the dial in some important ways in the last year,” Hood said.

“We discovered there are early stage entrepreneurs in Grants Pass. We are upping our game at a time when other resources in Jackson and Josephine (counties) are also upping their focus.”

The symposium will delve into what high-tech companies look for in a community and what their workers look for.

Hood has been part of the Southern Oregon Angel Network since 2011 and is a liaison to entrepreneurs. When investment isn’t logical, he suggests some start-ups are better suited for financing with lenders, such as nonprofit lender Craft3, which services rural communities throughout the Northwest, using Community Reinvestment Act funds.

“Finding the appropriate growth capital is important for them,” he said.

Equity investors typically look for a return of 10 or 20 times their cash infusion, he said, with super-high tech start-ups providing a potential of 40 times or more.

“Equity investors at the angel level are taking a fairly high risk,” Hood said. “Eight out of 10 of these early stage companies are going to fail, and they hope they get one of them that is going to cover all the losses from the rest of them. That’s why certain companies are attractive because they might have that kind of exits or be able to pay those kind of returns.”

As municipalities and other regional players work together, he said, it will increase economic vitality.

“It’s a question of growing pains. We are struggling to figure out how we can revitalize the community, trying to include as many people as possible, and make sure they have the resources they need so we can have a much more diverse economy,” he said. “We can be much more powerful if we put our resources together, and hopefully forget some of our differences, of which there are many.”

— Reach reporter Greg Stiles at 541-776-4463 or gstiles@rosebudmedia.com. Follow him on Twitter at www.twitter.com/GregMTBusiness or www.facebook.com/greg.stiles.31.

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